Michigan Backs $651 Million Ann Arbor Development With 1,069 Homes

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Michigan has approved a major state financing component for Arbor South, a planned $651 million mixed-use redevelopment in Ann Arbor that is expected to add 1,069 homes and transform more than 2.2 million square feet of property.

The Michigan Strategic Fund board approved an Act 381 Work Plan with state tax capture for eligible activities capped at $110.7 million, according to the governor’s office. The local portion of the work-plan request is valued at approximately $201.9 million.

Arbor South is planned for an underutilized corridor in Ann Arbor and would combine multifamily housing with hotel, office, retail and public space. The development is expected to include more than 100,000 square feet of retail, dining and entertainment uses.

Of the 1,069 planned homes, 200 are expected to be permanently affordable, according to the Ann Arbor Housing Commission.

A large brownfield-style financing package

Act 381 work plans allow eligible costs associated with redevelopment to be reimbursed through tax-increment revenues. The approval does not mean the state is writing the developer a $110.7 million upfront check; rather, it establishes the cap for eligible state tax capture under the approved plan.

That distinction is important when evaluating the public financing attached to large mixed-use developments. The project’s anticipated private and public capital structure is tied to future redevelopment activity and eligible costs, while the announced overall capital investment exceeds $651 million.

Arbor South will be developed by Eisenhower State Land Development Company LLC, a partnership between Oxford Companies of Ann Arbor and Crawford Hoying of Dublin, Ohio.

The developers and public officials describe the site as a southern gateway into Ann Arbor. Plans call for a walkable district with a public plaza, retail, restaurants, hotel space, offices and connections to transit and surrounding employment centers.

Housing supply at the center

The housing component is the most consequential piece for the regional market. Ann Arbor has struggled with housing affordability and supply constraints, and adding more than 1,000 units on one site would represent a sizable addition.

The planned 200 permanently affordable homes would be integrated into the broader development and located near jobs, transit and services, according to the housing commission.

The project also illustrates the increasingly common use of mixed-use redevelopment and tax-increment mechanisms to make large housing projects feasible in high-cost markets. Those structures can unlock difficult sites, but they also warrant scrutiny over eligible costs, projected tax revenues, construction timing and whether promised housing and public amenities are ultimately delivered.

The state approval moves Arbor South forward but does not eliminate development risk. Large projects can still change as financing, construction costs, leasing conditions and local approvals evolve.

Michigan officials announced the Arbor South approval as part of a broader package that also included a loan of up to $10 million to the Michigan CDFI Coalition to expand lending capital for community development, including affordable housing.